Aviation fuel prices cut again

November 15th, 2008 - 8:24 pm ICT by IANS  

New Delhi, Nov 15 (IANS) Bringing some more respite to domestic carriers, state-run oil marketing companies decided to reduce the price of aviation fuels by Rs.5,580 per kilolitre or over 12 percent effective Saturday, thanks to falling international crude prices.With airlines still reeling under low demand and high operational costs, there was no immediate move by them to cut fares. Aviation fuel accounts for some 35-40 percent of the operational costs of domestic airlines.

The jet fuel will now retail in Delhi at Rs.39,380.51 per kilolitre against Rs.44.965.70 earlier, and in Kolkata at Rs.47,805.04 against the earlier price of Rs.53,663.53. The prices were last cut at short intervals on Nov 1 and 4.

With this reduction, the ATF prices are close to those that prevailed in September 2007. This is the fifth cut in ATF prices since August when the prices rose to a new high of Rs.71,028.26 per kilolitre.

When contacted, the spokesperson for the country’s flasgship carrier Air India Jitender Bhargava said that when prices of aviation fuel were shooting up month after month, only a part of the additional financial liabilities were shared with the passengers.

“We have to look at the financial viability before passing out the benefit to our passengers even if the aviation fuel prices have come down,” said Bhargava.

He said the aviation sector cannot overlook the fact that the dollar has appreciated with the rupee. “In airline your cost heads are dollar denominated,” said the Air India official, clearly indicating that there was no immediate cut in airfares.

Indian carriers were given a respite last month, when they were allowed to clear their dues towards the purchase of aviation fuel with six monthly instalments besides an extended credit limit of 90 days to purchase their ensuing requirements.

At that time, the cumulative dues of the airlines industry to oil companies were about Rs.2,500-2,800 crore (Rs.25-Rs.28 billion) and were to be cleared by March 2009.

“We have not decided anything on (revising) airfares right now. It is too early. We will be in a position to take a decision only by Monday,” said the chief financial officer of SpiceJet, a low-cost carrier.

Civil Aviation Minister Praful Patel recently stated that airfares in the country would start falling from mid-December and that within six months the fares would be back to normal, driven by falling fuel prices and a higher number of passengers.

Jet fuel prices have been slashed every month since then and this is the third cut this month - the first being the monthly reduction which was followed by lowering of prices due to abolition of customs duty on the fuel.

Prices have been lowered further also because oil companies have now shifted to fixing rates in every 15 days instead of the previous practice of revising the prices based on average oil price in the preceding month.

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